This is from Downstream Ventures Petroleum Markets Forum

Author Comment dickmoody Global user (3/7/00 3:41:14 pm)

Monthly Oil charts-- are in a very steep and precarious inclination. I don't think current price rises are sustainable on this basis for an extended period of many many months. The angle of inclination is just too steep to support moves to the $40 range and beyond and have it just sit there and trade for several months to a year or more.

I just cannot see this happening. The technical formation is just too straight up to give solid technical support. There would really have to be some sort of long-term factor to keep it that high. It would have to be some artificial or some dire situation affecting supply. I can't see any possible fundamental reason for such sustainability other than technical factors. Politics and economic greed would/should simply take it back down if that is the motivating factor.

In fact, the move is so steep now, that it seems hard to believe that rational thinking folks inside OPEC or the oil biz would want such a rash, brash and short lived spike. Spikes are not that beneficial for corporate business in the long run. Thus, it would seem to me that perhaps indeed there is something else going on.

One thing seems certain -- the petro markets are no longer in the control of the big oil folks if they ever did have control. Perhaps they have engineered this move initially. If they did, they've lost control. This is evident by the nearly straight up advances in the charts.

The monthly cash-basis chart right now on 3/7/00 is showing normal bar line at its peak of range. IF prices advance further in the next week or two, then this would be indicative of a possible middle range of an overall long-term move. So far the move has gone from just above $10.00 to just shy of $34.00 for a $24.00. If the month's cash pricing continues to advance above $34.00 to $35-$39.00 then this would perhaps be signalling a "flag" formation pole. Such a formation would mean that we are half-way into a long term move. OR in other words after the flag forms we could see another move of perhaps $24.00 or possibly more. That could possibly mean $60.00+ a bbl.

Now, please don't get me wrong. I'm not saying this is going to happen. I'm only guessing at what may or many NOT form in the patterns. All that I'm saying here is that, for now, such a possibility might exist if the formation fleshes itself out. Indeed, we might be seeing a spike reversal that will change this market to the downside. This too, is equally possible.

It's just too early to place any bets. I only mention this as simply what might signals might be about to develop throughout this month. It's also very possible that prices retrace about and the current price range for March cash crude (WTI) will remain between $30 and $34. If this range remains throughout the rest of the month then we may continue to see that steady march upwards at a steep angle into April and perhaps beyond. Right now, the situation is very fluid but perhaps we'll see a pattern develop that can shed some light on future direction of the market.

Technically on the oscillators...the DMI-ADX is wide open full throttle looking for possible or probable further price advancement on the monthly cash charts basis. Such an indicator must be fully supported by similar weekly and daily chart basis in the DMI oscillators. As of now are also giving full throttle ahead signals.

On the Daily chart basis for DMI-ADX, the positive price advancement line is about to cross above the trendline. Usually, this is an extremely bullish signal indicating a strong advancement is about to take place. Based upon the chart formation itself and the actions of the 3/7/00 pricing on the April contract, it looks to me like we could yet see $35.00 before contract expiration. If so, it would more likely come later in the week. If we don't hit it though,it will likely not miss by much. Right now, the key factor is for the April contract to stay above $32.50 a bbl and close above that level for three days or so. If this happens look out for a possible breach of $34.00 and up to $35 or more. Frankly, I don't know how the market can technically sustain itself here especially in light of all the political talk going on in the fundamental side of this market. It seems that remainder of this week will be extremely critical.

=====================Disclaimer============================ Oh, any of you folks reading this, please be warned that this is not to be considered investment advice but rather the musings of an old retired commodities trader based on his own technical analysis. I've been wrong before and will be again but just thought I'd throw out these free comments for what they're worth.

-- Zdude (zdude777@hotmail.com), March 08, 2000

Answers

ZDude,

Thanks for reposting. How is Dick Moody's track record on predictions, anyone know?

-- (kb8um8@yahoo.com), March 08, 2000.

kb8:

That's a good question - who is Dick Moody? A DogPile web search doens't reveal anything about a Dick Moody connected to the oil or investment business. His profile at the Downstreamers board has nothing but his name. ZDude, do you know this fellow and, if so, what is track record and background?

-- Jim Cooke (JJCooke@yahoo.com), March 08, 2000.

Cannot contriute to who this chap is nor to his credentials.

I have seen his postings on Downstreamers before, and from memory they seemed lucid and well reasoned.

What jumped out from that article was that (predicting from) charting works as long as the behavior being charted is following reasonably normal behavior. I.e., the behavior is not way out of bounds of what the charts have seen before. I.e., the behavior causing the changes is not more irrational that ever seen before.

In other words, I've made my reputation and my fortune using charting and technical analysis, and these charts ain't makin' any sense AT ALL! Aggggggg!!!

Oh and hasten to add, a major gulp when I saw his $ 60/bbl figure. That boils down to rationing no matter how we or the .gov crowd cuts it.

-- redeye in ohio (not@work.com), March 08, 2000.

From the article posted:

"Now, please don't get me wrong. I'm not saying this is going to happen. I'm only guessing at what may or many NOT form in the patterns. All that I'm saying here is that, for now, such a possibility might exist if the formation fleshes itself out. Indeed, we might be seeing a spike reversal that will change this market to the downside. This too, is equally possible"

So, what exactly has he predicted? It could go up, it could go down, or it could go sideways. I can do this without studying any charts.

-- Jim Cooke (JJCooke@yahoo.com), March 08, 2000.

kb8,Jim and redeye:

All I can tell you about Dick is that to my knowledge he started posting at the old forum in response to some of Andys Gold threads back last October or so when Gold was rallying.

At that time I didnt believe him because I was real bullish on the Metals like a lot of other people on the forum, But Guess What...... ... he was right and we were wrong!

I've been following his predictions ever since and in my estimation he's a pretty accurate forcaster.

If he wasnt pretty good he would have been heckled off the boards by know. I think I'll drop him an email and let him know where we're at these days.

-- Zdude (zdude777@hotmail.com), March 09, 2000.

Zdude,

Thanks for the followup. I'd feel a little better about his predictions if I knew something about his background. I would have been REALLY impressed if he would have predicted today's $2.87 drop.

-- Jim Cooke (JJCooke@yahoo.com), March 09, 2000.